An­bang: Ho­tels bid fol­lows rules

China’s An­bang In­surance Group may get around do­mes­tic pol­icy bar­ri­ers with its in­creased of­fer of $14 bil­lion for Star­wood Ho­tels & Re­sorts World­wide, top­ping the lat­est bid from its ri­val Mar­riott In­ter­na­tional.

A spokesman for An­bang said on Tues­day that the in­vest­ment plan con­forms with rules and reg­u­la­tions and the com­pany has an am­ple overseas in­vest­ment quota for this year.

Chi­nese fi­nan­cial mag­a­zine Caixin had re­ported that the China In­surance Reg­u­la­tory Com­mis­sion, the in­dus­try watch­dog, may refuse to give ap­proval for two An­bang deals. The re­port said the deals could vi­o­late a rule that re­stricts do­mes­tic in­surance firms from in­vest­ing more than 15 per­cent of their to­tal as­sets abroad.

Caixin said An­bang has in­vested more than 171.6 bil­lion yuan ($26.4 bil­lion) overseas, in­clud­ing bids to ac­quire Star­wood and Strate­gic Ho­tels & Re­sorts. But its to­tal in­surance as­sets for last year would prob­a­bly be less than 1 tril­lion yuan.

How­ever, ex­perts said An­bang has an am­ple overseas in­vest­ment quota and can ben­e­fit from poli­cies that en­cour­age overseas in­vest­ment.

Hao Yansu, di­rec­tor of the School of In­surance at the Cen­tral Univer­sity of Finance and Eco­nom­ics in Bei­jing, said that ac­cord­ing to reg­u­la­tions, An­bang can in­vest no more than 15 per­cent of its to­tal as­sets — not to­tal in­surance as­sets — overseas.

Its to­tal as­sets have been es­ti­mated at more than 1.9 tril­lion yuan, ac­cord­ing to its web­site. This means that An­bang’s overseas in­vest­ment could be 285 bil­lion yuan.

Gui Jiey­ing, an an­a­lyst at Zero2IPO Group, said An­bang In­surance has in­vested abroad ag­gres­sively since 2014, when the State Coun­cil is­sued a guide­line to boost the Chi­nese in­surance in­dus­try. It en­cour­aged do­mes­tic in­surance com­pa­nies to im­prove in­vest­ment ca­pa­bil­i­ties and “go abroad”.

“China is re­lax­ing rules on in­surance com­pa­nies’ in­vest­ment, and An­bang is a mar­ket leader,” Gui said.

The high-pro­file com­pa­nies that An­bang has bought in­clude the Wal­dorf As­to­ria Ho­tel in New York, US life in­surance provider Fi­delity and Guar­anty Life, Bel­gium’s Fidea As­sur­ances and Delta Lloyd Bank, and Dutch in­surance com­pany VI­VAT. An­bang has also taken a con­trol­ling stake in South Korea’s Tong Yang Life.

All this in­vest­ment “can help An­bang to set up a global in­surance busi­ness net­work and sta­bi­lize re­turns”, Gui said.

A re­port by real estate con­sul­tancy com­pany JLL in Oc­to­ber said that China’s out­bound real estate in­vest­ment had surged by 50 per­cent to $15.6 bil­lion a year to date, fu­eled by in­sur­ers’ grow­ing in­ter­est in boost­ing the al­lo­ca­tion of their real estate as­sets.

Last week, Mar­riott in­creased its of­fer to $13.6 bil­lion, top­ping an ear­lier one of $13.2 bil­lion from An­bang. In a state­ment, Mar­riott said it was com­mit­ted to com­plet­ing its deal with Star­wood but didn’t in­crease its cur­rent of­fer.